In his second "Executive Decision" segment of Mad Money Tuesday night, Jim Cramer sat down with Mark Schneider, CEO of the Switzerland-based Nestle SA (NSRGY) , the packaged foods giant with sales up 37% for the year as investors flock to recession-proof companies.
Schneider first commented on Nestle's partnership with Starbucks (SBUX) , whose CEO, Kevin Johnson, appeared on Mad Money earlier this week. He said the partnership really is a win-win with Starbuck's great brand and products paired with Nestle's global distribution network. The first wave of products from the year-old deal are now on store shelves in 16 markets and the second wave of products is due to be launched in the fall.
Turning to the topic of sustainability, Schneider said recycling is a very important issue for Nestle and the company has from the beginning recycled their aluminum Nespresso coffee pods. Schneider showcased a bicycle made from recycled pods, one of 1,000 bikes in a pilot program.
Plant-based products are also a focus for Nestle, Schneider said, not only for meat-based products like burgers but also in the dairy aisle for items like ice cream. Increasing the number of plant-based alternatives will continue to be a driver of growth for the company.
Let's check in with the charts and indicators to see what investors and traders think of the stock.
In this daily bar chart of NSRGY, below, we can see that prices have rallied strongly from their October-December bottom. Prices are above the rising 50-day moving average line and the slower-to-react 200-day line.
The daily On-Balance-Volume (OBV) line has been rising the past 12 months to confirm the price gains with signs of more aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line all year but is now crossing to the downside for another take profits sell signal.
In this weekly bar chart of NSRGY, below, we can see a sideways consolidation pattern from 2017 to the end of 2018. This pattern preceded the rally this year. Prices are above the rising 40-week moving average line and at $15 over the line prices look extended compared the past three years.
The weekly OBV line has made a new high for the move up but it isn't in a really strong trajectory. The MACD oscillator is bullish.
In this first Point and Figure chart using percentage changes in price, below, we can see a potential upside price target of $172 being projected.
In this second Point and Figure chart using the "traditional method" of round dollar amounts, below, we see that prices reached and exceeded a $102 price target.
Bottom line strategy: With currencies in a race to the bottom along with bond yields it may be prudent to book some profits if you are long NSRGY. I feel that we are in uncharted territory with market relationships and I don't know how things will play out. A correction could develop "out of the blue".